Tax on State Pension

lindabea

I know that tax is not deducted directly from SP, but I have a question on how tax on pension earnings is applied. If someone is due to start their SP on 3rd April, and bearing in mind that this is not paid until a week in arrears ie first payment received on 10th April; should this payment be treated as income for 16-17 or for 17-18 tax year.

xylophone

See https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim76005

under "Payments not made weekly".

lindabea

OK. Thanks for that link. If I understand it correctly, it sounds like you regard a total of 52 weeks payments for tax purposes irrespective of how much you actually receive in any one year. Have I got it right

molerat

That does not quite answer the question though for payments "due" before the tax year. 52 weeks taxable is fine for a whole year but when SPA is reached mid way through the year how is the part year tax calculated. The op's scenario is an extreme case of one payment crossing tax years. Is that payment taxable in 16/17 or 17/18 ?

lindabea

molerat wrote: »

That does not quite answer the question though for payments "due" before the tax year. 52 weeks taxable is fine for a whole year but when SPA is reached mid way through the year how is the part year tax calculated. The op's scenario is an extreme case of one payment crossing tax years. Is that payment taxable in 16/17 or 17/18 ?

I understood that scenario as tax is due on the total payments received for those weeks in the part year.